In accordance with the international standard (the so-called key attributes) established by the Financial Stability Board, the European resolution regime is aimed at first preventing, from early stages, the deterioration of the financial situation of institutions, and then mitigating the possible effects of their failure, when it could not be avoided. The explicit objective of the new regime is to shift the cost to the shareholders and creditors of the failing institution, to avoid or minimize losses for taxpayers, to prevent contagion to other agents, and to preserve financial stability.
In this final stage of the procedure, the focus has been on one of the fundamental aspects of the framework: the resolution financing mechanism and, more specifically, the priority participation of shareholders and creditors in it, through the eventual reduction of the value of their securities or the conversion of debt into capital (bail-in), followed by the sector itself, through a resolution fund constituted with ex-ante contributions from credit institutions.
